The Union flag, also known as the Union Jack, left, stands next to a European Union (EU) flag during the start of Brexit negotiations in Brussels, Belgium. (Photographer: Jasper Juinen/Bloomberg)

U.K. Least Favourite Investment Destination Among Indian C-Suite Executives

Even as international investments by Indian companies is expected to rise, only a small part of it will go to the U.K. which emerged as the least favourite destination for Indian corporate leaders, according to a survey.

The U.K., which had until very recently been a key target country for Indian acquirers, is no longer on the list, according to the Baker McKenzie survey of 100 C-suite executives. Just 1 percent of those responding in India, and Asia more broadly, are looking to the U.K. as top destination for investment. And the Brexit is starting to have a major impact.

“It is not surprising, it is a little bit shocking and quite depressing,” Samantha Mobley, head of European Union Competition and Trade Practise group, said at the press conference to announce the finding. Referring to the uncertainty surrounding the Brexit negotiations, he said, “The thing is businesses don’t like uncertainty and the U.K. is one of such places today.”

More than 60 percent of top Indian executives surveyed expect their companies’ international investments to grow more than 10 percent, according to the survey.

On the merger and acquisitions front, the U.S. remains the top destination for corporates outside Asia. South East Asia stills remans the M&A favourite.

“However, intra-Asian deal sizes are still usually smaller than those in the Western markets, and we do also expect to see more mega deals involving Indian companies in the U.S. and Europe making headlines,” said Ashok Lalwani, global head of Baker McKenzie’s India Practice.

Despite being an election year, political risk was the lowest on the list of macroeconomic challenges businesses face, with regulatory scrutiny, cost pressures and disruption via technology raking higher.

“What our clients are telling us is that they would like to see certainty or political stability. They don’t have strong views one way or another on which party they would like to see,” said Pallavi Gopinath Aney of Baker Ackienze, on the impact of elections on the investment climate. “There is a need for capital to be raised and elections were factored into our survey results.’’

Lalwani said there has been decoupling as businesses are not influenced by what party is in power.